You buy 800 ordinary shares in company A for £1,000. split the cost of your original shares between the cash and the new shares in the same proportion as the value.work out the value of the cash in proportion to the total value of the cash and shares you get.You do this by splitting the original cost of the shares proportionally between the cash you get and the new shares: To work out your capital gain you need to allocate a ‘cost’ to this cash payment. you get an amount that’s equal to or more than 5% of the value of your shares in the original company, valued just before the takeover.you get shares and more than £3,000 cash.You’ll need to work out the capital gain on the excess of £500 (£2,000 - £1,500). You elect to reduce your allowable costs to nil and to be taxed on the excess. The sum of cash is small but it’s more than the original cost, so you need to work out the capital gain.
Your original shares in the old company cost £1,500. You get £2,000 cash and 2000 new shares in a company takeover. When you sell or dispose of your new shares you use a cost of nil to work out your capital gain. You must elect to do this it will reduce the cost of your new shares to nil. on the difference between the cash you get and the cost of your original shares.in the way described for larger amounts of cash.If you get cash that’s more than the cost of your original shares you need to work out your capital gain on the amount you get. When you sell or dispose of your new shares and work out your capital gain your allowable cost will be the cost of the original shares less the amount of cash you get. the cash you get is less than the cost of your original shares.you get less than £3,000 or an amount less than 5% of the value of your shares in the company, valued just before the takeover.You don’t pay Capital Gains Tax if both of the following apply: If the company taking over gives you cash and shares you may have to pay Capital Gains Tax on the cash you get. When you sell or dispose of your new shares they’re treated as if you bought them at the same time and cost as your original shares. If the company taking over issues shares only you don’t pay Capital Gains Tax when you get the shares. The most common types of transaction in a takeover are the issue of: You must pay Capital Gains Tax on any cash you get as part of the takeover If the company taking over is listed on a stock exchange the information you get about the takeover will usually say whether these conditions are met. One of those conditions is that the reorganisation applies equally to all holders of the class of shares being reorganised. Unless the issue is completely cash your shares in the old company are replaced with shares, securities or debentures in the new company.Īs long as you meet certain conditions you’re not treated as if you’ve sold or disposed of any of the old shares for Capital Gains Tax purposes. When a company takes over another it can issue its own shares, securities or cash.
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